Good but pricey
HCP, Inc. (NYSE:HCP) is among the largest and most diversified health care real estate investment trusts (REITs) in the country. Acquisitions have led to solid growth in recent years. It is well run and provides exposure to just about every health care property class out there. It’s a one-stop shop for REIT investors.
No matter what happens to the health care industry, people will need a place to go to be healed. That fact makes the company, and its dividend, pretty resilient. With the aging of the baby boomers, it is highly likely that HCP, Inc. (NYSE:HCP) will see continued growth for years to come. That said, HCP is so large that growth from here is likely to slow.
HCP’s yield is a miserly 4% or so. That’s on the low side of the sector because of the company’s impressive operating history. There is no question that HCP, Inc. (NYSE:HCP) is a great company, but at recent yield levels it isn’t as compelling an investment as it once was. This is the type of company to keep on a watch list waiting for a broad market pull back to bring the yield into the 6% to 8% range.
When it comes to dividends, Pitney Bowes Inc. (NYSE:PBI) shows that even a long history of dividend increases doesn’t guarantee anything. Taking a close look at the underlying business is still vital. AT&T Inc. (NYSE:T), for example, has been more adept at shifting to new technology. That makes the telecom giant a solid option. Then there are great companies that have been bid up so far that investors should probably sit on the sidelines waiting for a pullback. HCP is such a business.
The article Dividends Aren’t a Sure Sign of Success originally appeared on Fool.com and is written by Reuben Brewer.
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